IPEF takes off with India as partner; Partnership to solve supply chain issues
United States President Joe Biden on May 23 in Tokyo launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with a dozen initial partners, including India. Prime Minister Narendra Modi also participated in the event, and said, “IPEF reflects our collective desire to transform the Indo-Pacific region into an engine of global growth”.
Apart from India, other partners are Australia, Brunei, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, these countries represent 40% of world GDP.
The IPEF is seen as a move to counter Chinese influence in the Indo Pacific region and can help India achieve its main interest in the region- an improved supply chain.
IPEF; India’s interests
The US President while launching the framework said that tackling inflation is a top economic priority, and this framework will help lower costs by making its supply chains more resilient in the long term. President Biden said that this will be achieved through IPEF by establishing an early warning system, mapping critical mineral supply chains, improving traceability in key sectors, and coordinating on diversification efforts
Apart from this, IPEF also focuses on clean energy, decarbonization and infrastructure. With regard to India joining IPEF, The US State Department spokesperson had earlier said, “India’s clean energy transition is in the interests of the entire world, and we need to support India in achieving the ambitious clean energy targets that Prime Minister Modi announced at COP-26. We are already working with India and other partners to mobilise the necessary financing and technology to achieve these goals.” President Biden today also highlighted that IPEF will stress on clean energy, decarbonization.
Four Pillars of IPEF
IPEF’s four pillars include fair and resilient trade (including digital, labour, environmental and other standards); supply chain resilience; infrastructure, decarbonisation and clean energy; and tax and anti-corruption.
The framework of IPEF has been designed prioritising “flexibility and inclusion”. So participating countries can join IPEF without necessarily joining all the four pillars of the framework, which is also in India’s interest.
Highlights of the US President’s speech
“U.S. foreign direct investment in the region totaled more than $969 billion in 2020 and has nearly doubled in the last decade, and we are the leading exporter of services to the region, helping fuel regional growth,” President Biden said.
With 60 percent of the world’s population, the Indo‑Pacific is projected to be the largest contributor to global growth over the next 30 years.
In order to harness innovation in the clean energy, digital, and technology sectors, while fortifying the economies of IPEF partners against fragile supply chains, corruption and tax havens, the framework is based on a connected, resilient, clean and fair economy.
Specifically, the United States said it would work with partners to seize opportunities and address concerns in the digital economy in order to ensure small and medium businesses can benefit from the region’s rapidly growing e-commerce sector while dealing with concerns such as online privacy and unethical use of artificial intelligence.
President Biden said that the US will also seek strong labor and environment standards and corporate accountability provisions.
He said the US will seek first-of-their-kind commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs. “We will pursue concrete, high-ambition targets that will accelerate efforts to tackle the climate crisis, including in the areas of renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions,” he added.
